CALGARY, Alberta, Oct. 25, 2017 (GLOBE NEWSWIRE) — Delphi Energy Corp. (“Delphi” or the “Company”) provides an operations update on recent positive well results, increasing condensate yields, and ongoing cost reduction initiatives.
Drilling and Completion Operations Successfully Delineating Delphi’s 167.5 section Bigstone Area
Completion operations on the Company’s ninth, tenth and eleventh wells of the 2017 program have concluded, with two of the wells now on production and the third well expected to be on production in late November. The 2017 drilling program, with an increased focus on delineation drilling, has significantly de-risked Delphi’s large undeveloped land position. The increase in number of new well licenses by multiple industry competitors directly offsetting Delphi’s land holdings will further assist in delineating the Montney potential at Bigstone.
A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/11eb63b1-7bea-4443-ace1-33754dd430cc
The 13-10-59-23W5 well (“13-10”) is the southern-most Montney well the Company has drilled to date. It also marks the first significant step-out Montney well that Delphi has drilled in over three years and has de-risked a large portion of the Company’s Montney rights at Bigstone. 13-10 was drilled to a total depth of 5,908 metres with an extended-reach horizontal lateral in the Montney of 2,848 metres and was completed with the Company’s Fourth Generation frac design through a 40-stage liner. The well was flowed on clean-up for 2.5 days, recovering approximately 21 percent of the initial load frac water. Over the last 24-hours prior to running production tubing, the well flowed on clean-up at an average rate of 4.7 million cubic feet of natural gas per day (“mmcf/d”) of raw gas and 952 barrels per day (“bbls/d”) of 44 degree API field condensate (237 bbls/mmcf of sales gas). Total sales production rate for 13-10 over this 24-hour period was approximately 1,805 barrels of oil equivalent per day (“boe/d”) (63 percent liquids), including an estimated plant natural gas liquids (“NGL”) yield of 46 bbls/mmcf of sales gas. 13-10 has recently been brought on production through the Central Foothills Gas Gathering System and the Repsol operated Edson Gas Plant.
The 9-21-59-22W5 well (“9-21”) was drilled to test the eastern edge of the Montney play at Bigstone. 9-21 was drilled to a total depth of 5,865 metres with an extended-reach horizontal lateral in the Montney of 2,841 metres and was also completed with the Company’s Fourth Generation frac design through a 40-stage liner. The well was flowed on clean-up for 2.6 days, recovering approximately 16 percent of the initial load frac water. Over the last 24-hours prior to running production tubing, the well flowed on clean-up at an average rate of 6.8 mmcf/d of raw gas and 584 bbls/d of 48 degree API field condensate (100 bbls/mmcf of sales gas). Total sales production rate for 9-21 over this 24-hour period was approximately 1,823 boe/d (47% liquids), including an estimated plant NGL yield of 46 bbls/mmcf of sales gas. The 9-21 well is expected to be brought on production in late November.
The 16-08-60-23W5 infill well (“16-08”) was drilled between the 15-08 and the recently drilled section 9 wells. 16-08 was drilled to a total depth of 5,656 metres with an extended-reach horizontal lateral in the Montney of 2,574 metres and was also completed with the Company’s Fourth Generation frac design through a 40-stage liner. The well was flowed on clean-up for 3.1 days, recovering approximately 23 percent of the initial load frac water. Over the last 24-hours prior to running production tubing, the well flowed on clean-up at an average rate of 4.7 mmcf/d of raw gas and 1,133 bbls/d of 42 degree API field condensate (281 bbls/mmcf of sales gas). Total sales production rate for 16-08 over this 24-hour period was approximately 1,988 boe/d (66% liquids), including an estimated plant NGL yield of 46 bbls/mmcf of sales gas. 16-08 has recently been brought on production.
Delphi has finished drilling two additional step-out pad wells at 13-7-60-23W5 and 16-12-60-24W5, which are the western-most wells the Company has drilled to date. Fracturing operations have commenced and are expected to be finished by the end of October with on-production dates anticipated in late November.
Field operations are back on track after two separate early winter snow storms in the Bigstone area in September and early October delayed overall drilling, completion and pipelining operations. The drilling program is on schedule for the planned 17 wells to be rig released in 2017, with an additional two wells commencing drilling operations before year-end. The program contemplates having 15 of those 17 wells completed and placed on production by year-end. The Company’s two drilling rigs are currently drilling an infill well at 14-15-60-23 W5M and another step-out delineation well at 15-19-59-23 W5M.
A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/61abf6d1-85bd-4414-a518-70a72d3c39ea
Condensate Production Growth Continues to Outpace Natural Gas
Condensate production growth remains on track with fourth quarter 2017 production volumes expected to be nearly double what they were one year earlier. In comparison, natural gas and natural gas liquid volumes are expected to increase approximately 40 percent from one year earlier.
Condensate as a percentage of the total product mix has more than doubled to 32 percent on wells completed with the 3rd and 4th generation frac designs compared to 15 percent on the original first generation frac design. Wells with higher field condensate to gas ratios provide higher revenue combined with lower operating and transportation costs per boe. Field condensate has both lower operating and transportation costs compared to the Company’s natural gas production.
A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/da861464-0a18-4609-8eb0-284d9c001d72
Facility Projects and Upgrades Target Reduced Operating Costs While Increasing Capacity
Delphi recently performed a workover and has commenced construction of additional storage and pumping capacity at its water disposal facility located at 16-34-59-21W5 (“16-34”). The Company ordered the required equipment earlier this year in anticipation of the increased field activity planned for 2017 and beyond. Disposal capacity will be increased to over 6,000 barrels per day of water from 2,200 barrels per day currently. The increased activity experienced by the Company since bringing in a second drilling rig late in 2016 and more recently completing seven wells in late May through early September resulted in greater volumes of produced and completion load water being trucked further afield to third party disposal facilities. The expansion at Delphi’s 16-34 water disposal facility enables the Company to return to internally handling its water disposal requirements with spare capacity potentially available for third party volumes and associated revenues. The expansion is scheduled to be completed in November.
Plans remain on-track for the construction and commissioning of the Company’s amine project at the 7-11-60-23W5 compression and dehydration Montney facility. When brought on-line in the second quarter of 2018, up to 17 mmcf/d of gross raw sweetened Montney gas will be processed at the Repsol operated Bigstone Gas Plant where the Company owns a 25% working interest. This will significantly reduce operating costs for the portion of Montney gas that gets processed at this plant.
Marketing Arrangements Mitigate Delivery Curtailments and AECO Natural Gas Price Risk
Delphi has strategically mitigated key market risks through its firm downstream transportation arrangements, largely from selling approximately 90 percent of its natural gas volumes directly into the Chicago market via the Alliance pipeline. Over the past three months during significant AECO natural gas price volatility, Delphi has been able to achieve a realized natural gas price (excluding hedges) of approximately 2.4 times the average AECO price of $1.46 per mcf. The contracted renewable firm Alliance Full Path Service to Chicago, with the accompanying 25 percent preferred interruptible service, is adequate for the projected growth of natural gas volumes into 2019.
A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/e47e6874-d64e-4239-80a4-c4b5bac7aa10
Delphi believes the current constraints on the James River lateral of the NOVA system will be alleviated over time. Accordingly, Delphi does have TCPL firm service contracted starting April 2018 to augment its Alliance service and diversify its long term natural gas market exposure.
With Delphi’s field condensate volumes having almost doubled from the fourth quarter of 2016 and an overall increase in industry activity, the Company has mitigated delivery restrictions and significant wait times by contracting access to a designated riser off-load for its field condensate production. With priority access to this proximal delivery point, Delphi has begun to realize reduced field condensate transportation costs through shorter trucking distances and wait times.
Commodity Hedging Strategy Continues to Mitigate Downside Price Risk and Protect Return on Capital
Delphi has also mitigated commodity price risks through its hedging strategy. Including the impact of the Company’s natural gas hedging program, Delphi further increased its realized natural gas price by approximately $0.44/mcf over the past three months. Delphi’s natural gas exposure remains well hedged through 2018 and into 2019. The Company remains constructive on long term condensate pricing, but has recently reduced its exposure to spot pricing through to the middle of 2018, with WTI fixed pricing equivalent to approximately US$53.35 per bbl.
|Commodity Hedges||Q4 2017||Q1 2018||Q2 2018||Q3 2018||Q4 2018||2019|
|Natural gas (mcf/d)||65||%||53||%||52||%||52||%||47||%||21||%|
|Average hedge price ($/mcf)||4.11||3.91||3.91||3.91||3.88||3.90|
|Crude oil (bbl/d)||51||%||37||%||33||%||14||%||14||%||14||%|
|Average hedge price ($/bbl)||66.37||66.78||67.06||70.00||70.00||70.00|
|* Based on average 2017 production of 33.5 mmcf/d of natural gas and 2,150 bbls/d of field condensate.|
Corporate Production Update
With field operations back on track after the early snow and wet ground conditions, current production capability has increased to approximately 10,800 boe/d (approximately 40 percent condensate and NGL’s). With four additional wells (2.6 net) expected to be on-stream prior to year-end, the Company is targeting production of 11,000 to 11,500 boe/d in the fourth quarter of 2017, a 58% increase from the fourth quarter of 2016. Annual 2017 production is expected to be slightly below the 9,000 to 9,500 boe/d forecast, due to less volumes than forecast during the K3 turnaround in the second quarter, and third quarter production of approximately 9,300 boe/d. Third quarter production was negatively impacted by weather related operational delays and curtailed production of 600 boe/d, more than half of which was to mitigate the impact of offset well fracturing operations from adjacent industry activity.
The Company’s primary focus remains on creating significant value for its shareholders through its successful development and delineation of the Bigstone Montney property, while maintaining an adequate level of financial flexibility.
CONFERENCE CALL AND WEBCAST
A conference call and webcast to review third quarter 2017 results is scheduled for 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) on Thursday, November 9, 2017. The conference call number is 1-844-358-8760. A brief presentation by David J. Reid, President and CEO and Mark D. Behrman, CFO, will be followed by a question and answer period. The conference call will also be broadcast live on the internet and may be accessed through Delphi’s website at www.delphienergy.ca or by entering https://edge.media-server.com/m6/p/pw3mwudu in your web browser. A rebroadcast will also be available on Delphi’s website or at https://edge.media-server.com/m6/p/pw3mwudu on your web browser.
About Delphi Energy Corp.
Delphi Energy Corp. is an industry-leading producer of liquids-rich natural gas. The Company has achieved top decile results through the development of our high quality Montney property, uniquely positioned in the Deep Basin of Bigstone, in northwest Alberta. Delphi continues to outperform key industry players by improving operational efficiencies and growing our dominant Bigstone land position in this world-class play. Delphi is headquartered in Calgary, Alberta and trades on the Toronto Stock Exchange under the symbol DEE.
|FOR FURTHER INFORMATION PLEASE CONTACT:|
|DELPHI ENERGY CORP.|
|2300 – 333 – 7th Avenue S.W.|
|Telephone: (403) 265-6171||Facsimile: (403) 265-6207|
|Email: email@example.com||Website: www.delphienergy.ca|
|DAVID J. REID||MARK D. BEHRMAN|
|President & CEO||CFO|